During intraday trading on Wednesday, February 14, HDFC Bank’s share price experienced a decline of over 2 percent, reaching a new 52-week low of ₹1,363.45 on the BSE. The stock opened at ₹1,380.90, compared to the previous close of ₹1,394, and dropped over 2 percent to hit the 52-week low mark.
HDFC Bank’s stock has faced significant selling pressure this year, with the current market price at ₹1,363.45 reflecting a decline of over 20 percent since the beginning of the calendar year 2024. The majority of this downturn occurred following the release of the lender’s December quarter earnings.
India’s largest private sector lender posted a remarkable 33 percent year-on-year (YoY) increase in net profit, reaching ₹16,372 crore in the third quarter of FY24. Additionally, the bank’s net interest income (NII) surged by 24 percent YoY to ₹28,470 crore during Q3FY24.
The bank observed a 4 percent quarter-on-quarter (QoQ) growth in loans, while deposits saw a 2 percent increase. However, its Liquidity Coverage Ratio (LCR) decreased to 109.8 percent from 120 percent QoQ, attributed to the utilization of liquid assets to support loan expansion. Additionally, the bank’s loan-to-deposit ratio (LDR) rose from 108.4 percent to 110.5 percent QoQ. Notably, the standalone HDFC Bank’s LDR was reported at 89 percent in Q3FY24, compared to 85 percent in Q1FY24.
Analysts suggest that the stock may be worth accumulating at its current level for long-term investment purposes.
According to Foram Chheda, CMT, and founder of ChartAnalytics.co.in, HDFC Bank’s stock experienced a significant correction after reaching a peak near ₹1,720 in December last year. This decline has led the stock to hit a new 52-week low today, indicating a notable weakness in its underlying trend.
However, Chheda also noted that the stock has entered the oversold zone.
While there are no confirmation signs yet, HDFC Bank appears to be forming a base. Investors should exercise caution and consider accumulating the stock gradually at the current level and subsequent lower levels,” Chheda advised.
Shiju Koothupalakkal, a technical research analyst at Prabhudas Lilladher, observed that HDFC Bank’s stock has seen profit booking following a short pullback from the ₹1,380 level. Presently, it maintains a weak bias, having breached the previous low of ₹1,380.
Koothupalakkal further highlighted that the Relative Strength Index (RSI) has lingered near the oversold zone for some time. Technically, a decisive breach above ₹1,450 would improve the bias. On the downside, the crucial support level is ₹1,280, below which the overall trend would turn bearish, Koothupalakkal noted.
In a significant development, the Reserve Bank of India (RBI) granted approval on February 5 for HDFC Bank Group’s proposal to acquire an “aggregate holding” of up to 9.50 percent in six banks. These banks include Axis Bank, Bandhan Bank, ICICI Bank, IndusInd Bank, Suryoday Small Finance Bank, and Yes Bank.
As previously reported, these approvals were granted subsequent to applications submitted by HDFC Bank (acting as a promoter/sponsor of the Group) to the Reserve Bank of India (RBI) on December 18, 2023. The RBI’s approval is effective for a duration of one year from the date of the RBI’s letter, expiring on February 4, 2025.
HDFC Bank is mandated to ensure that its “aggregate holding” in the mentioned banks does not exceed 9.50 percent of the paid-up share capital or voting rights of the respective banks at any given time. This requirement ensures compliance with regulatory guidelines and maintains the integrity of ownership structures within the banking sector.
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